Residential development in LLC or individual's name?

[Cynthia Hartley]

Hi All,

I have two adjacent lots in Baltimore City on which I plan to build two two-unit dwellings i.e. four units in total. For financing purposes - mind you I am looking 18 - 24 months out to start construction, so I am planning ahead - can you offer the pros and cons of putting the title in my name vs in an LLC for the immediate term? Are the chances of me obtaining construction finance options better if the properties are in my name or in an LLC? Thanks for any thoughts and guidance. Cynthia

[Ned Carey]

Generally  what @Russ Draper says is true. It is easier to get financing for 1-4 unit properties in your own name. However with new construction the type of loan required the opposite may be true. The lender may require it to be in an LLC.

Since you already apparently own the properties, I would talk to lenders and see what your options are and see what the lender requires. I wouldn't change title until you have a lender in place.

It goes without saying that you will need to guarantee the loan personally even if in an LLC for a project like this.